3 Smart Things Every Family Should Know To Improve Financial Literacy

Financial literacy is literally a matter of dollars – and sense. It’s about making sure you live an amazing life you enjoy without the frustration and worry of money stress. However, getting the life you want strongly depends on what you do with the money you earn. That’s why financial literacy is crucial. And the sooner kids learn about how to manage money effectively, the more likely they are to have a financially successful future. 

One of the easiest ways to start talking about money with your kids is through books that make learning about money fun. In this post, financial advisor and author Anthony Delauney, CFP, shares his expert advice on some essential things families should know for better financial literacy.

How Do I Teach My Kids About Money?

As a financial planner for nineteen years, my focus is always geared toward helping families improve financial literacy. One common concern I hear from parents is, “How do I start teaching my kids about money?” And, “I wish that I had learned about this stuff (money) when I was younger.” 

As both an advisor and a parent, I realize that simply telling our children what to do — doesn’t always produce the results we want. Primarily because children tend to learn through stories and examples, they are constantly observing the people and situations around them. Then they do their best to interpret how someone else is feeling and how that person might react in a given situation.  

For example, in previous years, I have shared a study with parents that explained children’s behavior called the Marshmallow Study. This study involved giving a child a marshmallow and then telling them not to eat it until the adult returns. The adult then leaves the room and monitors the child’s behavior.

This video example of the Marshmallow Study is hilarious! The kids were trying their hardest to resist.

This fascinating concept can easily relate to personal finance when you substitute the marshmallow for money. However, while the study is perfect for sharing with adults, it is not an easy idea for children to grasp. And I wanted to create a way to explain the study so that my kids, Abbie (age 12) and Jason (age 10), would both understand and enjoy it. So to make it fun, I knew I needed to create some sort of short and simple game with rules they could easily understand. 

The Jellybean Game

Since jellybeans are my kids’ favorite, I came up with the idea of giving them ten jellybeans each  (to represent money) on a plate first thing in the morning. Then I told them that for every hour they resist eating the jellybeans, I would give them five more until dinnertime. (This works like earning interest.)

Based on my children’s personalities, I was fairly confident that my son (Jason) would hoard all of his jellybeans. And he would have a huge pile by the end of the day (like saving money). On the other hand, my daughter (Abbie) would likely devour all of her jellybeans in less than one hour (similar to spending all your money). Then I tried to imagine how Abbie might feel later in the day as she watched Jason’s pile grow and her plate remained empty. 

So I also wanted to incorporate a way that if one person ate all their jellybeans, the sibling could help out by loaning some of their jellybeans (similar to loaning money). Jason and Abbie often tend to look out for one another, so I was fairly confident that they would help each other if necessary.  

While developing the game, I realized that this would be a great game that all families could use to help teach children about the value of savings and delayed gratification. So, since Abbie, Jason, and I all love to write, I came up with the idea of turning the game into a rhyming children’s picture book. And we named the book Dash and Nikki and the Jellybean Game. I wanted the book to serve as an easy tool for parents to start money conversations with their children. It also can be helpful for teachers who want to incorporate financial literacy education for their students.

How can imagery in books be useful for teaching kids about financial literacy?

Children learn through stories. Especially at a young age, it is hard to teach them about money because they don’t have any direct connection to money. They can’t earn it. They can’t spend it unless it is gifted to them and their parents give them permission to use it. And they don’t have any ownership of it. Imagery allows us to apply adult lessons to topics and circumstances that children can better understand. 

For example, if you tell a story about a child going trick-or-treating on Halloween and coming home with a giant bag of candy, many children can easily relate.

They know the joy of the ‘work’ they did to go to each person’s home to collect the candy. They also know how it feels to come home and sort through the different types of candy to determine which pieces are their favorite and which ones they want to trade with their friends or give to mom and dad. And they know how it feels when their parents say that they can’t have it all and have to take a portion of it away.

Children feel a sense of ownership with the candy because it is something that they worked to earn. Parents can also relate to how their children feel about the candy because the parents experienced the same emotions when they were children. 

Imagery helps us to build our own personal connection to a story.

It allows us to step into the characters’ shoes and try to imagine how we would feel and act in their situations. For instance, if the story is told in a way where the children feel a connection with the characters. Then, it becomes much easier to incorporate lessons on financial literacy without ever mentioning the word ‘money.’ 

In the story of trick-or-treating, candy becomes the currency. And trick-or-treating becomes the work that earns the candy. Also, sorting through all the candy at the end of the evening acts like spending and saving money. For instance, eating some candy now or storing some candy away for later. Plus, there are even taxes (as we are all aware of the ‘parent tax.’).

So imagery builds the connection that allows parents to start having meaningful conversations with their children about topics and circumstances that they will experience as they get older.

Why is it important for parents and caregivers to start conversations with their children early around financial topics?

Conversations around financial topics are critical to start at an early age because parents need to help mold a child’s mindset and habits as they relate to money. The same is true for how children relate to food, caring for their bodies, treating others, their work ethic, and even building study habits for school. We develop habits very early in life, and the longer we persist with those habits, the more ingrained they become in us. 

Teaching children to have an open, respectful, and comfortable relationship with money early before they start earning allows them to be better prepared when cash starts flowing into their bank accounts. 

It’s also important to start educating children at home and in school because there are so many outside influences that will steer both children and young adults toward making poor financial decisions. The world is not built around helping assure that individuals and families experience financial success. Instead, the focus is on immediate gratification and consumerism. Companies spend significant amounts of money to determine the best way to convince you that you cannot live without their product or service. That is how they make money. Educating children and helping to mold their mindset early in life gives them a major step up as they take their journey into adulthood. 

Why storytelling is so important for all of us to have better financial literacy?

For nearly two decades, I have worked in the financial services industry. I have also been a parent for many years. And what I’ve discovered in both my professional and personal life is that storytelling is one of the best methods of communication. 

“We understand numbers, and we usually understand logic, but the thing that inspires us to truly act is passion.” 

We must understand the ‘Why’ behind what we are doing. That is the beauty of storytelling. It gives us the chance to imagine a new life by stepping outside of ourselves and into the characters of our stories. It allows us to sympathize with their struggles and celebrate their successes. In other words, we get a better connection to the characters by putting ourselves in their shoes. Those emotions are what allow the lessons of the story to last. Stories remind us of the way we felt at that moment. For example, young children may remember Pinocchio’s nose growing when they think of telling a lie. And older children may reflect on the white whale in Moby-Dick whenever they become obsessed with a particular goal.

As adults, the same understanding applies. Sharing the statistics on how much someone needs to save for retirement or how much life or income protection a person may need can sometimes be a pointless discussion. But if we take a moment to tell a story of the outcome, the reality of the numbers becomes much more real.

For instance, if a young couple is preparing to have a child, yet they do not have any life insurance in place. Asking them to describe what life would be like for their spouse and child if they died creates a very real image. It creates a story, and they can then choose if that is the story they want. 

Let’s say an individual is thinking about retiring. Asking what type of life they want in retirement is far more exciting. Rather than simply saying you can live off a percentage of your pre-retirement income. The bottom line is that storytelling is a foundation for improving financial literacy. It is what drives us to act and to turn our dreams into realities.

Anthony Delauney is a financial advisor, a franchise business owner, and the author of three financial education books in the Owning the Dash series: Applying the Mindset of a Fitness Master to the Art of Family Financial Planning (2019), The No-Regrets Retirement Roadmap (2021), and Dash and Nikki and the Jellybean Game (2021).
Anthony has worked in the financial services industry since 2003, helping families develop financial plans that comprehensively address their broad range of goals and dreams, including cash flow management, debt elimination, protection planning, new home purchases, family planning, small business planning, education and retirement planning, investment education, and estate planning. He has acquired the professional certifications of Certified Financial Planner^TM practitioner, Chartered Financial Consultant^®, Chartered Retirement Planning Counselor^SM, Retirement Income Certified Professional^®, and Behavioral Financial Advisor^TM. He has made it his professional mission to help families make sense of and manage every aspect of their financial lives.

On a personal front, Anthony has been married to his wife, Laura, since 2006, and they have two children, Abbie and Jason. The Delauneys have a deep passion for helping growing families and a strong charitable focus on children’s hospitals.